Momentum is clearly building in the Bitcoin markets. The asset is up 12.5% so far this year and options markets are indicating that there are available call options for a $12,000 strike price one month after the halving.
BTC has spent the weekend consolidating just north of the psychological $8,000 barrier. Key technical indicators are starting to flip bullish and the asset has just closed its largest green weekly candle in three months.
With geopolitical and economic tensions mounting, the safe-haven asset narrative has come into play for Bitcoin. Add to that the approaching halving, difficulty adjustments, and hash rate highs, and things are really starting to look bullish again.
Bitcoin Option Calls for $12,000
Looking at the cryptocurrency derivatives exchange FTX has revealed a number of call options for high-priced BTC after the halving. Options differ slightly from futures in that the investor is not obliged to sell the contract when it expires.
For these contracts to be profitable the Bitcoin price must be above $12,430 by June 25, and investors seem confident that it will be.
$BTC $12K calls for ~1 month after halvening being sold for $430 on @FTX_Official
For people who don't understand options, btc needs to be $12,430 to break-even (+53% from here). Every $430 above $12,430 is a double.
Eg. – If price $15K on June 25, return is (15-12)/0.43 = 600% pic.twitter.com/b24t90yY8K
— Ceteris Paribus (@ceterispar1bus) January 12, 2020
A close below $12,430 would result in a lost bet effectively as the contracts will be worthless. The data, while not conclusive, shows that sentiment is turning bullish for Bitcoin markets and some are willing to bet in the asset jumping by more than 50% from current levels.
CME Options Launch Today
Today is also a big day for institutional products such as the CME Bitcoin options contracts going live. Previous launches such as Bakkt’s BTC options in September have been slightly underwhelming in terms of market reaction and the same is likely to be the case today.
Options on Bitcoin futures are coming on January 13, bringing greater capital efficiencies and flexibility in managing bitcoin price risk. https://t.co/BRElrAuehQ pic.twitter.com/234XNApjDL
— CMEGroup (@CMEGroup) January 8, 2020
Industry experts such as JP Morgan managing director, Nikolaos Panigirtzoglou, have called the products ‘highly anticipated’ due to the fact that CME is a much larger platform than Bakkt. According to a report from Bloomberg, Panigirtzoglou stated;
“There has been a step increase in the activity of the underlying CME futures contract. This unusually strong activity over the past few days likely reflects the high anticipation among market participants of the option contract.”
Unless they’re physically settled, Bitcoin futures and options are not necessarily bullish for the asset’s price. However, institutional product launches such as today’s offering from CME suggest that BTC is growing as an asset class in its own right.
Options markets also open a window into sentiment from deep-pocketed investors, many of which are now turning bullish on Bitcoin as the halving nears.
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